New Funds: Greenwich Eyes Europe Mezz Fund –

Greenwich Street Capital Partners is preparing to enter the European private equity market via a new $1 billion mezzanine fund.

In addition, the former Travelers Group buyout arm has changed its name to GSC Partners and added former Goldman, Sachs & Co. executive Richard Hayden as a vice-chairman.

Hayden will head up the management of GSC European Mezzanine Partners LP, which GSC Partners will launch next month, said Keith Abell, a co-president of the firm.

GSC Partners’ participation in European private equity has been limited to a few investments in insurance companies. Abell said his firm saw a mezzanine fund as having the best risk to reward ratio.

“In Europe, high yield is as yet underdeveloped, and the lion’s share of leverage is still bank debt,” Abell said. “It’s a fairly new game, but our experience thus far is that there is an appetite for mezzanine.”

The firm will open an office in London, where the fund will be based. Prior to joining GSC Partners, Hayden was a deputy chairman of Goldman Sachs’ European investment banking practice. Helping him manage the fund will be Kristine VandenBeukel.

Abell said he anticipates that Citigroup, which acquired Travelers Group, would commit capital to the mezzanine fund amounting to approximately one-fourth of the fund’s value.

GSC Partners currently is investing the $1.5 billion Greenwich Capital Partners II LP. In December, the firm acquired MICR Data Services for its financial services outsourcing platform Check Printers. MICR, with annual revenue under $10 million, provides checkbooks to the brokerage and mutual funds industry. Late last year the firm also made a minority investment in Tower Hill Capital Group, a company that provides placement agent services to start-ups.

GSC Partners also plans on buying distressed debt. The New York firm currently is raising a collateralized debt obligation fund with a target of $600 million.